Peak Oil: One of my better predictions

I was wondering the other day, how much gasoline costs in Europe. It's about $3.40 a gallon in the Twin Cities, and over $5.00 a gallon in Canada, but what about in France or Germany? Have gas prices reached the "magic" $7.00 a gallon mark? I'd long imagined that was a price point that would change consumer choices about where to work and live, and what to drive....

Is the effect entirely due to refining capacity, as some suppose? If so, wouldn't the effect differ between the US and Europe?

... If we accept the trend then French gasoline will be $13.50 @ 2013 and $27 @ 2019. I wonder how close this is to the "tipping point" where the ROI on petroleum storage starts to become persuasive.

Without adjusting for income in any way, it's noteworthy that US gasoline is now as expensive as French gasoline @ 2001 and French gasoline today is nearing the "magic" $7/gallon mark....

It was remarkable that despite very different tax systems, prices rose in parallel.

In 2007 the GOP's explanation for rising prices was inadequate refining capacity. That might have contributed, but it was clearly a minor effect. The Left's explanation was evil speculators; but in this case any speculators would be our friends (even if they are producers who keep oil in the ground).

The Great Recession grinds on (screw the technical definition, feels like a recession to us). Even so, gas prices in MSP are back to almost $4/gallon. By August we may make my $5/gallon prediction.

After the summer season gas prices will fall. If China's bubble bursts in 2012 and their Great Recession begins our gas prices will fall probably bounce around $4/gallon for a year or so. Otherwise gas prices will head for $8-10/gallon in the US by @ 2017.

This is a good time to be investing in energy efficient high speed rail, public transit systems, and bicycle lanes. We'd be rethinking a lot of our assumptions. I am confident Minnesota's GOP controlled legislature will do the right thing.

... James Hamilton, an energy economist at UC San Diego, has studied not only the current oil prices, but the 2007-2008 run-up, in great detail...

.. If you read Hamilton’s detailed paper (pdf) on that period — no one can accuse him on not looking seriously at the numbers — you’ll hear about two major forces in the oil market, both of which are scarier, in the long-run, than speculators. On the supply side, Saudi Arabia. On the demand side, China. And caught between them, the global economy, and our wallets.

Traditionally, Hamilton says, Saudi Arabia, the world’s largest producer of oil, would smooth out spikes in demand. But around 2007, Saudi Arabia stopped. They left oil in the ground, assuming they could sell it for more later...

But that was 2007-2008. Is Saudi Arabia part of the story now? It appears so. Not only did they slash production in March, but they’re freaking everybody out by offering accounts of their production volume that don’t make any sense.

On the demand side, China — and other developing nations, but mostly China — is the 800-pound gorilla in the room. “China was a net exporter of petroleum up through 1992, and its imports were still only 800,000 barrels a day in 1998,” writes Hamilton. “By 2007, however, China’s net petroleum imports were estimated to be 3.7 mbd, making it the world’s third-largest importer and a dominant factor in world markets.”...

It's similar in Quebec; over the past decade the US tracks a few years behind prices elsewhere -- the difference seems to be primarily due to tax differences.

So it's easy to see our future -- just look at a comparable city in most other nations.

I compared Minneapolis-St Paul to Montreal recently. I think some of the differences reflect gas prices.

I wonder about the impact on the aged and disabled. Public transit everywhere is best suited to cognitively and physically "able". Disabled persons tend to rely on individual vehicles, taxis, or van services. All those become much more expensive as gas prices rise.